Log On America, Inc. (Nasdaq: LOAX) today announced second quarter 2001 results.
David R. Paolo President and CEO stated, “The company is pleased to report significant progress with its restructuring efforts that began in the second and third quarter of 2000. The company has and will continue to make the painful decisions, which curb revenue growth but drive margin and profitability. We have elected to stay on track to attain our goal to become EBITDA positive by years end. Management will continue to make the sometimes painful decisions necessary to reach EBITDA positive.”
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Log On America reported revenues for the three months ended June 30 of $3.2 million, an increase of 3% over reported revenues of $3.1 million for the same period in 2000. Reported revenues for the second quarter decreased 13% compared to the prior quarters $3.5 million as we sold off our residential voice resale business.
Gross margins slightly increased to 27% as compared to the previous quarter excluding certain one-time charges. As a result of these one-time charges, margins decreased to 8% this quarter compared to the 42% margin realized in the same period in 2000 and 25% margin realized in the previous quarter.
SG&A decreased by $1.7 million or 28% as compared to the same period in 2000. SG&A slightly increased $400,000 or 10% compared to the prior quarter. The majority of this increase from the prior quarter related to additional one-time restructuring charges, marketing expenses, and professional fees associated with our litigation. These additional charges were offset by a reduction in personnel related costs and our continuous cost containment initiatives.
During the second quarter we recognized approximately $17.6 million in one-time impairment charges related to our customer lists, equipment and other long-lived assets. We also recognized an Extraordinary gain of approximately $1.9 million related to the early extinguishment of our Nortel credit facility.
As a result of the above, net loss increased to $21.2 million compared to $5.6 million in the same period in 2000 and $4.7 million in the prior quarter.
Earnings before Interest, Taxes, Depreciation, and Amortization, and other non-cash items (“Adjusted EBITDA Loss”) for the quarter was approximately ($3.2) million compared to ($2.4) million in the prior quarter.
In closing, Mr. Paolo added, “With the extinguishment of our debt obligations with Nortel and the settlement of our litigation with Credit Suisse and Marshall Capital, our balance sheet and capital structure has been simplified. As evidenced by our recent sale of our residential voice customers, we are continuing our cost reduction efforts and programs to right size our company and focus on our core strengths – high margin internet revenue.”
